Checking 72t Plan
L1: Checking 72t PlanThanks for this wonderful resource. I’m posting to check 72t plan details. Background: I’m 54 1/2 (DOB 7/1/54), and need to start a 72t due to job uncertainty due to eye surgery;Total IRA Assets: $683K Rollover IRA’s; $257K Roth (Converted $17K-$28K annually, 2000-2008.);$30K other. Annual Budget: $50K with 5% annual inflation for 5 years, to be conservative (have been living on $38-40K past 2 years, and will budget carefully.) 72t Plan: Separate Rollover IRA’s so that a 72t account is created of $500K, yielding annual 72t payments (starting 1/24/09) of $27,634.05, assuming age of 55, using Amortization, interest rate 3.57%. Ideally find part-time work (at a minimum) earning $15K after tax. Then, supplement as needed with penalty-free Roth withdrawals of converted principal only, following the 5-year rule for each separate conversion amount. Keep emergency assets (non-retirement) of $35K intact. Annual 72t Payments: 1/24/09 through 1/24/13. First Modification Date: 1/24/14. Cost to Bust Year I: $2,734, should I be able to return to full-time work.Questions: 1)Thoughts/suggestions on the plan? 2) Will I need to withhold taxes if taxes on the $27,634 are likely to be low after deductions? 3) First date to take additional $ out of Rollover penalty-free is 1/24/14? Thank you! Jenna2009-01-16 20:04, By: Jenna T., IP: [22.214.171.124]
L2: Checking 72t Plan
#1 – Plan sounds good. You seem to have allocated enough to your plan [$500k] to meet you objectives while leaving the other $183k outside the plan for emergencies.
#2 – Pretty much up to you.Butif you don’t use withholding, you may have to file quarterly tomake sure that the IRS gets what they want before the end of the tax year.
#3 – Your date of 1/24/2014 is indeed the first modification date. The 5-year period ends on 1/23/2014 and you turn age 59.5 on 1/17/2014.
Good luck!2009-01-17 16:28, By: Gfw, IP: [126.96.36.199]
L2: Checking 72t Plan> interest rate 3.57%My only question here is where did this number come from? I thought that 120% of the Fed mid-term rate was quite a bit lower than this.2009-01-17 18:41, By: Ed_B, IP: [188.8.131.52]
L3: Checking 72t PlanFor January, 3.57% is the higher of the Nov. & Dec. Rates From our Interest Rate Page…Revenue Ruling 2002-62 and Qualified SEPP Plans post 12/31/2002: The interest rate that may be used is any interest rate that is not more than 120 percent of the federal mid-term rate for either of the two months immediately preceding the month in which the distribution begins. Estimated Maximum Interest Rates for 72(t) & 72(q) SEPP Plans where the initial distribution occurs during the following time periods: 01/01/2009-01/31/2009: 3.57%02/01/2009-02/28/2009: 3.43%03/01/2009-03/31/2009: 2.48% Hope this helps to clarify.2009-01-17 19:01, By: Gfw, IP: [184.108.40.206]
L4: Checking 72t PlanYes, it does. Thanks for the clarification.2009-01-17 19:47, By: Ed_B, IP: [220.127.116.11]